* Until this week, European emerging markets had largely dodged the vicious selloff that has swept through their peers elsewhere. But now they are cracking.

* Big banks are beginning to loosen their tight grip on lending, creating a new opening for consumer and business borrowing that could underpin a brightening economic outlook.

* Veteran Microsoft executive Satya Nadella has emerged as the leading candidate to be the software company's next CEO, as directors wrestle with the role of Chairman Bill Gates.

* A potent mix of rising exports, consumer spending and business investment helped the U.S. economy end the year on solid footing.

* Holiday sales lifted Amazon.com Inc's fourth-quarter revenue 20 percent over a year earlier, spurring profit but not enough to match Wall Street projections. The Seattle retailer's shares tumbled in after-hours trading on the results and a disappointing outlook for its current quarter.

* Saks, under new ownership, is pushing into a higher luxury strata, but at the same time plans to expand its Off Fifth outlet stores-and muss them up a little.

* Google posted a 17 percent increase in revenue and a 17 percent increase in net income in the fourth quarter compared with the prior year, one day after it announced plans to sell its unprofitable Motorola smartphone unit to Lenovo Group Inc for $2.9 billion.

* Zynga Inc is making its biggest acquisition ever, pushing further into mobile videogames, while cutting its workforce for the third time in two years.

FT

European Union banks may have to hire more employees to cope with stress tests by regulators, accounting firm PwC said. The European Banking Authority has been conducting stress tests regularly in the past but has faced criticism for being too soft.

New-home building in Britain last year hit its highest level since the financial crisis but remains far too low to meet a strong recovery in demand, according to data from the National House Building Council released on Friday. New home registrations in the UK increased by 28 percent in 2013 to 133,670, the highest since 2007.

Anglo-Dutch oil company Royal Dutch Shell has suspended its controversial Arctic drilling programme as part of a wider drive to cut spending and streamline operations following a major profit warning.

Zynga said it will acquire NaturalMotion, which has created games like "Clumsy Ninja" for Apple mobile devices, for $527 million in cash and stock in a bid to grow its mobile game revenue.

Serco said 2014 profit could be as much as 20 percent below forecasts, a sign that the cost of rebuilding the outsourcing group from high-profile government contract failures is continuing to take its toll.

NYT

* While Amazon.com Inc's revenue rose 20 percent to $25.59 billion, the company announced on Thursday that it was considering raising prices by as much as 50 percent on its $79 Prime shipping program.

* Microsoft's search for a new leader appears to be focusing increasingly on an internal candidate from the company, including Satya Nadella, a longtime executive who has led the company's initiatives in cloud computing.

* In yet another reminder of the importance of using different passwords across different websites, Yahoo Inc said Thursday that attackers had attempted to gain access to Yahoo Mail accounts using usernames and passwords collected from a breach on a third-party site.

* Lenovo Group Ltd, already the world's biggest PC maker, is a company in a hurry. It entered into a deal to buy IBM's low-end server business that will remain in demand for years, and Motorola Mobility, which makes it the trusted partner of Google.

* Toyota Motor Corp has told its dealers to stop selling about 36,000 vehicles of its most popular models because a component on the heated seats does not comply with a federal safety standard for flame retardant, the automaker said on Thursday.

* Goldman Sachs Group Inc's board granted its chief executive, Lloyd Blankfein, restricted shares worth $14.7 million as part of his pay package for 2013, according to a filing made public on Thursday.

* Libya's sovereign investment fund has filed a lawsuit against Goldman Sachs Group Inc in London's High Court, claiming that the bank made more than $1 billion in derivatives trades that became worthless, but left Goldman with a profit of $350 million.

* This year, a new kind of advertising - personalized and based on physical location down to a matter of feet - will greet fans in Times Square and MetLife Stadium, where the Super Bowl will be played this weekend.

* Eight years after its inception, the biggest private equity fund in history has yet to meet its own minimum expectations. The investment performance of the fund, a $21.7 billion war chest raised by the Blackstone Group LP, remains below a threshold that it must clear in order for Blackstone to start collecting profit from it, according to a disclosure on Thursday.

* As the economy shrugged off the effects of the government shutdown and debt standoff, economists said President Obama faced an uphill battle to burnish his economic legacy before leaving office.

* President Obama, supported by many Republicans and business groups, has met opposition from labor and many Democrats on his push for fast-track approval of trade deals with Pacific Rim nations and Europe.

* There are groundbreaking business deals. And then there are ones that threaten to break up governments. When Denmark gave the global financial giant Goldman Sachs Group Inc the go-ahead on Thursday to buy a stake in its state utility, the move was not exactly followed by a celebratory signing ceremony.

* Southwest Airlines Co and JetBlue Airways Corp said on Thursday that they had bought the takeoff and landing rights at Ronald Reagan National Airport in Washington that the Justice Department required American Airlines Group Inc and US Airways Group Inc to sell as a condition of their merger.

* JD.com, one of China's biggest e-commerce companies, said in a regulatory filing on Thursday it plans to raise $1.5 billion this year in an initial public offering in the United States.

* Box, an online storage and document-sharing provider, has filed confidential paperwork to go public, a person briefed on the matter said on Thursday.

* The video camera maker, GoPro, known for its users' adrenaline-soaked exploits has its sights set on becoming a media company.

Canada

THE GLOBE AND MAIL

* Ontario will hike its minimum wage for the first time in four years on June 1, opening a growing gap with other provinces and territories amid an uncertain economy. Premier Kathleen Wynne will raise the wage to C$11 from C$10.25, tying Ontario with Nunavut for the highest in the country.

* Canada's electronic eavesdropping agency, Communications Security Establishment Canada, reportedly tracked the wireless devices of thousands of travellers by using information gleaned from free Internet service at a major Canadian airport. The revelation is contained in a top secret document retrieved by U.S. whistleblower Edward Snowden.

Reports in the business section:

* Ontario is demanding the federal government do more to protect automakers in a new free-trade agreement with South Korea, arguing the deal as it currently stands would "negatively impact" the industry in the province. Economic Development Minister Eric Hoskins says he wants Ottawa to secure protections similar to ones the United States received in its own deal with South Korea in 2011.

* Electronics retail giant Best Buy Canada is cutting 950 jobs at its namesake and Future Shop stores as it streamlines its business to take on tougher competition.

NATIONAL POST

* Toronto city council's final budget session played out much like the rest of this tumultuous term, with insults hurled across the chamber floor. In the end, Mayor Rob Ford managed to squeeze C$726,000 in immediate savings in a C$9.6-billion budget that passed 35 to 9 Thursday night, and which he ridiculed as "the worst budget that has ever been presented."

FINANCIAL POST

* Some of Toronto's biggest Bay Street law firms are now actively recruiting clients of Heenan Blaikie LLP as word spreads that the firm may soon take drastic action to deal with financial challenges.

* As anticipation builds over the imminent release of two major reports that could seal the fate of Keystone XL pipeline, Gary Doer, Canada's ambassador to the United States, remains confident the long-delayed project is primed for presidential approval.

Britain

The Telegraph

ZYNGA BUYS BRITISH GAME MAKER NATURALMOTION FOR $527 MILLION

Zynga, which is known as much for its struggles as a public company as for its hits such as Farmville, will acquire NaturalMotion, the company behind hit mobile games such as Clumsy Ninja for $527 million.

BUSINESS LENDING CHANNELS 'DAMAGED', SAYS BCC, AS NET LENDING FALLS

Business lending fell in December, Bank of England data showed on Thursday, in what business groups described as proof that corporate funding channels were "damaged". Net lending to non-financial firms declined 1.9 billion pounds in December, following November's sharp drop of 4.6 billion pounds, which represented the biggest fall since records began in 2011.

The Guardian

SANTANDER UK STOCK MARKET FLOTATION 'WILL NOT HAPPEN IN 2014'

Santander UK will await clarification on new rules relating to capital levels and the "ringfencing" of banking business before it goes ahead with a flotation of its UK arm. The long-awaited listing of the UK business - first mooted in 2010 - has been deemed a medium-term prospect by the Spanish-based bank and is not expected to take place this year.

BARCLAYS TO CUT HUNDREDS OF JOBS

Hundreds of jobs are being lost at Barclays under changes in its corporate banking division, it has been announced. Around 400 posts will go, and the Unite union said a further 120 were being placed at risk this year.

The Times

ASTRAZENECA TURNS ITS BACK ON "DISEASES OF THE POOR" AstraZeneca has abandoned any scientific effort to search for new medicines to tackle many of the world's deadliest diseases by shutting down its drug discovery work into neglected tropical diseases, tuberculosis and malaria. Britain's second-largest drugs company has decided that infectious diseases are "not a priority" as Pascal Soriot, its chief executive, cuts costs and scrambles to halt a slide in profits.

The Serious Fraud Office has asked Parliament for an emergency cash injection of 19 million pounds in order that it can continue with blockbuster investigations and clean up bungled cases. The white collar crime-fighting agency said that it needed the money before the end of March to finance investigations into Libor-rigging, alleged bribery by Rolls-Royce in Asia and Barclays' dealings with the Qatari Government in 2008.

Sky News

PRODUCT GROWTH HELPS BSKYB BEAT FORECASTS

Strong growth in on-demand and home communication products helped BSkyB beat City forecasts despite growing competition for pay-television viewers, the company said.

SERCO SHARES DOWN 17 PERCENT ON PROFIT WARNING

Troubled outsourcing firm Serco has seen its shares drop 17 percent after it issued a profit warning. The company said its 2014 profit may be 20 percent lower than market forecasts, due to implementation of a business overhaul following contract disputes with its biggest revenue stream, the UK Government

Fly on The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:Personal income for December reported at 8:30--consensus up 0.2%Consumer spending for December reported at 8:30--consensus up 0.2%Core PCE price index for December reported at 8:30--consensus up 0.1%Chicago PMI business barometer for January reported at 9:45--consensus 59.5UMich consumer sentiment final read for January reported at 9:55--consensus 81.0

ANALYST RESEARCH

Upgrades

CSC (CSC) upgraded to Neutral from Underweight at JPMorganCitrix (CTXS) upgraded to Overweight from Neutral at JPMorganComputer Programs (CPSI) upgraded to Buy from Neutral at B. RileyCracker Barrel (CBRL) upgraded to Buy from Hold at Miller TabakDomtar (UFS) upgraded to Buy from Hold at Deutsche BankEPL Oil & Gas (EPL) upgraded to Buy from Hold at StifelEricsson (ERIC) upgraded to Buy from Neutral at UBSGenerac (GNRC) upgraded to Outperform from Neutral at RW BairdGigamon (GIMO) upgraded to Overweight from Equal Weight at BarclaysGlatfelter (GLT) upgraded to Buy from Hold at Deutsche BankHillshire Brands (HSH) upgraded to Market Perform from Underperform at Wells FargoIDEX Corp. (IEX) upgraded to Buy from Hold at Brean CapitalITT Educational (ESI) upgraded to Equal Weight from Underweight at Morgan StanleyInternational Rectifier (IRF) upgraded to Buy from Neutral at CitigroupJDSU (JDSU) upgraded to Outperform from Market Perform at William BlairLinear Technology (LLTC) upgraded to Buy from Neutral at CitigroupMainSource Financial (MSFG) upgraded to Outperform from Market Perform at Raymond JamesMarathon Petroleum (MPC) upgraded to Outperform from In-Line at Imperial CapitalNetflix (NFLX) upgraded to Equal Weight from Underweight at Morgan StanleyNewfield Exploration (NFX) upgraded to Buy from Hold at StifelPulteGroup (PHM) upgraded to Outperform from Market Perform at Raymond JamesRaytheon (RTN) upgraded to Buy from Hold at Drexel HamiltonSunCoke Energy Partners (SXCP) upgraded to Outperform from Neutral at Credit SuisseTetra Tech (TTEK) upgraded to Outperform from Neutral at RW Baird

Downgrades

ADT Corp. (ADT) downgraded to Hold from Buy at StifelADTRAN (ADTN) downgraded to Neutral from Buy at GoldmanAkzoNobel (AKZOY) downgraded to Neutral from Outperform at Exane BNP ParibasCARBO Ceramics (CRR) downgraded to Sell from Neutral at GuggenheimCapstead Mortgage (CMO) downgraded to Market Perform at Keefe BruyetteChef's Warehouse (CHEF) downgraded to Hold from Buy at CanaccordDeutsche Bank (DB) downgraded to Equal Weight from Overweight at BarclaysKennametal (KMT) downgraded to Neutral from Buy at LongbowMidstates Petroleum (MPO) downgraded to Equal Weight at Morgan StanleySilicon Image (SIMG) downgraded to Hold from Buy at NeedhamTIBCO (TIBX) downgraded to Underweight from Equal Weight at Barclays

Initiations

AmREIT (AMRE) initiated with a Buy at SunTrustGas Natural (EGAS) initiated with a Hold at WunderlichHeadwaters (HW) initiated with a Buy at Deutsche Bank

HOT STOCKS

Zynga (ZNGA) to acquire NaturalMotion for about $527M, announced 15% workforce reductionSanofi (SNY) filed patent infringement suit in U.S. against Eli Lilly (LLY)E-Trade (ETFC) announced Jefferies (JEF) alliance, increased access to IPO, secondaries Amazon (AMZN) considering $20-$40 increase in Prime membershipBroadcom (BRCM) raises quarterly dividend by 9% to 12c per share Chubb (CB) announced repurchase program of up to $1.5B of sharesWesco Aircraft (WAIR) to acquire Haas Group for $550MChipotle (CMG) said strong traffic trend from Q4 continuing in Q1